Member Loyalty Hinges on a Great First Impression

When was the last time your CU reviewed its member onboarding program?

Studies show that consumers gain their first impressions of a business within seven seconds—and initial perceptions are hard to change.

This illustrates an important aspect of member loyalty for credit unions: Members who are happy early on are more likely to remain so for the long term.

Member loyalty often can be measured by how early members became fully engaged with the cooperative. How welcome they felt, how valuable they found the services, and how much a part of the institution members believed themselves to be are critical components to the long-term viability of the relationship.

Abhijit Palit

A well-crafted onboarding strategy not only increases the chances of securing that loyalty, it can also reduce the costs of serving long-term members and improve the success rates of cross-selling efforts.

When was the last time your credit union reviewed its new-member onboarding program?

A great onboarding program is both simple and well-organized. It begins at the initial point of contact and can last weeks, or even months.

To be truly effective, the program’s designers must have a keen knowledge of the new member. Fortunately, increased access to consumer data is making this easier for credit unions.

The following scenario illustrates how well-honed data and proper analysis can bolster an onboarding strategy:

A large regional financial institution was looking to establish strong customer relationships right from the time of their joining the institution. Because engagement was a success metric of the onboarding program, cross-selling strategies were going to be a key part of the effort.

Other key objectives included enhancing engagement with newly acquired products and services, and customer retention.

To set the program up for success, the financial institution understood that customer segmentation would be critical. After all, treating all new customers the same, regardless of their unique profiles, would be the easiest way to “disconnect” with these consumers—and thereby lose out on the opportunity offered when a customer joins.

Group-target customers
To effectively segment new customers, the financial institution partnered with our data analytics firm to analyze its existing customer data and then look outside its walls for more information.

Internal analysis included elements such as the financial institution’s own segments and variables, including the customer’s distance from a branch.

Our analysts then gathered external data to amplify the financial institution’s customer profiles. This enrichment of data was ultimately used to group customers together based primarily on their life stages, products that would likely interest them, and the delivery channels they would most respond to.

Seeking to provide effective and appropriate analytics to the financial institution’s program, IQR incorporated questions about which products/services were most popular across the various customer segments. Analysts also looked at things like the effect of seasonality on the financial institution’s past cross-selling success.

This deep-dive analysis yielded even more insights for the organization beyond its planned onboarding program. After getting a closer and more in-depth look at its customers and programs, the financial institution’s leadership began to see guidance on things like future program enhancements, drivers for retention, product/service adoption and use, and even channel optimization.

Effective onboarding
After identifying the audiences most likely to respond to an engaging onboarding program, the collaboration built out a preliminary touch-point program that would take place over a new customer’s first 12 months.

In conjunction with the financial institution’s expert staff, IQR analysts designed a customer experience that spread across each of the key customer segments and included direct mail, email, and telephone communications.

Product cross-selling strategies and marketing channels were prioritized based on six key segments identified during the analysis. For the first 60 days, significant effort was expended in cross-selling specific products and services that augment the checking account (the most common product when joining the financial institution) and promote a “primary” long-term relationship (e.g. direct deposit, online banking, etc.).

In addition, IQR recommended a healthy mix of cross-selling and informational communication (e.g. how to access the ATM and branch network, ways to fund the checking account, how to sign up for mobile banking, etc.) customized across the segments. This improved the customer’s likelihood to engage with content from the financial institution given the timeliness and relevance of the onboarding experience, and helped realize future cross-selling potential.

The execution was customized by specific segment needs versus a “one size fits all” strategy. In addition, other cross-selling strategies were implemented across segments that focused on the high contribution lending and investment products, such as auto loans, credit cards, and securities.

The channel mix was then customized based on segment channel preferences and each segment’s expected future profitability.

Measurement is crucial
Because leveraging data analytics was a relatively new path for the financial institution, it was important to establish metrics for success. These metrics were used to identify outcomes of the program and measure cross sales and retention for a 12-month duration.

IQR’s onboarding program targeted roughly 200,000 customers per year. Among the targeted, there was a 20% increase in the average number of products and services used per household at the onboarding program’s 12-month mark.

If you are looking at making some hard decisions regarding your customer retention program, don’t forget to take a critical look at your onboarding process.

Start with the data that’s right under your nose, beef it up with external sources, and use this information to craft the most compelling program—one tailored to your membership.

Don’t be afraid to collaborate with experts to ask the right questions and to develop the appropriate metrics. It will shed new light on your membership and facilitate better decisions for future sales and marketing strategies.

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